Marriage is the merger of many things — including debt. According to Debt.org, debt is one of the most common problems someone brings into a marriage, which also happens to be one of the leading causes of divorce. Still, newly married couples have a choice: They can tackle the debt together and learn a valuable life lesson or be torn apart by the financial stress.
One man took the former route. He and his wife conquered $110,000 in debt and built a lucrative business that will likely send them into early retirement.
The $110,000 Elephant in the Room
Devin Elder is a 36-year-old sales and operations manager from San Antonio. He and his wife married in 2008, and both of them had individual debt before they got married. At first, the debt didn’t seem like much — until they merged finances. Elder told GOBankingRates, “We each had reasonable debts, like car payments and students loans, and very little credit card debt. But with two times the people, that number was a lot bigger.”
In 2008, Elder and his wife decided it was time to tackle their debt. They added up their car payments, student loans, credit cards and mortgage, and realized they owed a total of $110,000.
Elder had heard about passive income, so he started an online business to try to increase their income and pay off their debt. After quickly realizing his side business was time consuming and not profitable, Elder turned to financial guru Dave Ramsey. He bought Ramsey’s “The Total Money Makeover” and got to work.
The Elders had a solid dual income: Devin was making $80,000 a year — but getting “killed on taxes because of commission” — and his wife made $40,000 a year as a teacher. Using the debt snowball method, they started paying off their debts one by one, starting with the smallest debt: a car loan.
They also analyzed their monthly budget. Elder created a simple Excel spreadsheet with categories for everything. The couple tracked their spending daily and used any extra money to pay off their debt. “Living on our budget was brutal, but we made it into a game,” said Elder. “We gave up the idea of having nice cars or a big house and made it our mission to save as much as possible.”
Is There a Free Alternative?
Part of the Elders’ extreme savings plan involved brutally cutting every corner possible. Elder said his mantra became “Is there a free alternative?” Every time he could have spent money on something, he would ask himself that question and almost always come up with an answer.
For example, when he needed a ladder to paint his house, he borrowed one from a neighbor. When he and his wife wanted to go to the movies, they watched one online. And, they went to the park for picnic dates and had friends over for happy hour. When asked if he ever splurged, Elder laughed and said, “No. It sounds cheap, but it worked.”
In 2010, two years after they started their journey, the Elders paid off their last debt: Devin’s $30,000 student loan. He said, “The student loan had low payments, but it’s a blessing not to have it hanging over my head.”
Instead of celebrating the achievement with a fancy dinner or party, Elder said, “You know, we were so used to not spending, we didn’t need to celebrate. The reward was our sense of pride, relief and peace. That was a lot better than a big party.”
Breaking Up With Dave Ramsey
The Elders continued to budget and save, and they stayed debt free over the next two years, through the birth of two of their children and a home purchase.
Elder admits he veered off Ramsey’s plan when he took out a mortgage and attended a real estate seminar but felt it was a better idea to take advantage of the low rates. “Dave Ramsey is a good starting point and instills financial discipline,” he said. “You have to have that. It’s like financial grade school — it built my muscle. But I was ready for graduate school.”
This might be surprising, as Ramsey fans are typically fiercely loyal, but Elder explained, “You can cut costs all day but cannot be truly wealthy. You must increase your income.” So, he set out to do just that.
Building a Real Estate Business
The seminar Elder attended in 2012 was associated with an education and mentor group for real estate investors called Lifestyles Unlimited. The group is popular among people who want to build passive income through real estate investments, like house flipping and rental properties.
Elder recognizes there are a lot of “snakes and shady characters” associated with these kinds of seminars, but he found that this particular group provided him the coaching and education he needed to make the leap into real estate investing.
“Educating yourself does not mean doing Google research or just reading a book,” he said. “That’s like a doctor performing an operation after watching YouTube videos.”
By immersing himself in the real estate industry, Elder gained insights from true professionals, learned how to properly weigh the risks and benefits, and met numerous industry contacts. He cashed out his 401(k), took the 10 percent penalty hit and bought a house with a short-term loan with just a few thousand in out-of-pocket costs. While this kind of bold move is generally not recommended by financial advisors, Elder said, “In 2008, I lost half of my retirement money, and I didn’t want to do that again. I wanted to take that money out and put it to work for me.”
And so far, it has worked for him. He and his wife own an apartment complex and several rental houses, and they have also found success flipping homes in San Antonio. He has yet to lose money but admits not all his endeavors have been profitable. “I have had projects come in over budget. On one flip I only made $300, but I learned a lot,” said Elder.
Achieving Their Financial Goals
Their financial success has allowed the Elders to loosen up their budget a bit. “We eat out a little more, and we spend more on kids activities because I want them to have experiences,” said Elder. (However, he still drives a 2004 Toyota with 130,000 miles.)
Although he is still working a full-time job, Elder hopes to retire in the very near future. In fact, he wants to retire as a 40-year-old millionaire.
Despite their parting of ways, Elder credits Ramsey with his financial success. “Getting out of debt was a great foundation for my marriage,” he said. “Dave Ramsey really gave us the discipline we needed to move mountains.”
Photo credits: Courtesy of the Elders